US Lawmakers Urge SEC to Repeal SAB 121 Amid Cryptocurrency Custody Concerns

US Lawmakers Urge SEC to Repeal SAB 121 Amid Cryptocurrency Custody Concerns

U.S. lawmakers are urging the Securities and Exchange Commission (SEC) to repeal Staff Accounting Bulletin No. 121 (SAB 121), a regulation that mandates cryptocurrency custody accounting guidelines for financial companies. The call for repeal was led by U.S. House Financial Services Committee Chairman Patrick McHenry and Wyoming Senator Cynthia Lummis, according to a report by Crypto Briefing.

The lawmakers emphasized their stance through a bipartisan joint resolution (HJ Res. 109), which aimed to revoke the SEC’s custody guidelines under SAB 121. However, the resolution was previously vetoed by U.S. President Joe Biden, sparking ongoing debate about the future of cryptocurrency regulation in the United States.

What is SAB 121?

SAB 121 provides guidance on how companies that hold cryptocurrencies on behalf of customers must account for them on their balance sheets. Under this mandate, companies are required to report these assets as liabilities while disclosing associated risks. The rule aims to increase transparency but has faced criticism for placing additional burdens on financial institutions that offer cryptocurrency custody services.

Critics argue that SAB 121 imposes unnecessary constraints on companies looking to engage with digital assets, hindering the growth of the cryptocurrency market by creating barriers to institutional adoption.

Bipartisan Push for Repeal

In a letter to the SEC, McHenry and Lummis underscored their concerns with SAB 121 and urged the agency to reverse its stance. They stressed that the bipartisan joint resolution to repeal SAB 121 (HJ Res. 109) reflects a strong message from Congress about the need to reassess regulatory requirements for the cryptocurrency industry.

Despite President Joe Biden’s veto of the resolution, lawmakers are continuing their efforts to challenge the SEC’s custody guidelines, arguing that SAB 121 could stifle innovation and restrict access to cryptocurrency services for both companies and consumers.

Regulatory Debate Over Cryptocurrency Custody

The push to repeal SAB 121 is part of a larger debate surrounding cryptocurrency regulation in the United States. As the SEC seeks to implement policies that ensure transparency and accountability in the custody of digital assets, lawmakers and industry participants are calling for a more balanced approach that fosters innovation without imposing undue burdens on financial institutions.

Supporters of SAB 121 argue that it provides crucial safeguards for consumers, ensuring that companies holding digital assets are transparent about the risks involved. However, opponents believe the guidelines could deter companies from offering cryptocurrency services, limiting competition and access in the growing digital asset market.

Conclusion: U.S. Lawmakers Challenge SEC’s Cryptocurrency Custody Guidelines

As U.S. lawmakers continue to urge the SEC to repeal SAB 121, the debate over the future of cryptocurrency regulation in the United States intensifies. The bipartisan effort led by Patrick McHenry and Cynthia Lummis reflects growing concerns about the potential impact of SAB 121 on the cryptocurrency market, as regulatory challenges continue to shape the industry’s evolution.

With the resolution facing a presidential veto, the ongoing conversation about balancing transparency and innovation in digital assets remains at the forefront of the regulatory landscape.

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To learn more about the ongoing debates around cryptocurrency regulation and institutional involvement, explore our article on the latest news, where we provide insights into the regulatory frameworks shaping the future of digital assets.